If you were the CEO for both a major social media firm and a payments company, both public entities, which you founded, and in which you owned enough stock to make you a billionaire many times over, would you or would you not see the long-term potential of Bitcoin and cryptocurrencies? Before you answer this query, just understand that Jack Dorsey is just such a fellow, and he has recently been on a crusade to persuade other industry titans to understand that the Internet needs a global currency.
Social media platforms have connected the world like never before. The Internet recognizes no boundaries, but e-commerce still relies upon a traditional banking system that is centralized and that has real trust issues, when it comes to the true identity of anyone that accesses the network. Cross-border wire transfers generally take a minimum of two days to complete, if everything transpires correctly, weeks, if they do not. Credit and debit card cross-border payments incur a fraud rate that is ten times the level of regular domestic payments, and we have not counted denied transactions.
People have forgotten why Bitcoin came along in the first place, but Jack Dorsey, the 43-year old CEO that we noted above, has not forgotten, and in recent weeks, he has been interviewed by Forbes, appeared on several podcasts, and tweeted away on Twitter, all actions directed at the notion that his company and others, along with the general public, would greatly benefit from a global virtual currency.
Should it be Bitcoin? Jack’s opinion: “I believe the Internet will have a native currency, and I don’t know if it’s Bitcoin. I think it will be [Bitcoin] given all the tests it has been through and the principles behind it, how it was created. It was something that was born on the Internet, was developed on the Internet, was tested on the Internet, [and] it is of the Internet.”
Why does he tend to focus on Bitcoin and not other cryptocurrencies? Per Jack: “Most of it is just due to the principles that created it, the community around it, the ideals that it fosters, the brand, but there’s an element of practicality to it as well… I think there’s interesting ideas elsewhere, but I think those ideas can be integrated into Bitcoin if they have the merit that is above some bar, and it feels like the one that wants to be the currency the most vs. others that are doing more general-purpose things.”
The major distraction, as he sees it, was that investors got caught up in the crypto hype before all the kinks had been worked out. Merchant sign-up was going smoothly, but then speed issues with updating the blockchain became a major problem that had to be addressed. Price volatility was another concern, but not when times were good and Bitcoin was appreciating wildly. Merchants began to “hodl”, so to speak, leaving their deposits in BTC and profiting on the float. When Crypto Winter commenced, risk suddenly entered the equation, which dampened the entire spirit of the merchant accepting community.
The temptation to play the float game may have stemmed from basic human nature, but the industry has gone a long way to address speed issues. Coin systems like Ripple and Tron can stand side-by-side with plastic payment cards today, and Bitcoin has launched its Lightning Network, a series of enhancements designed to bring efficiency and speed to the check out process.
Jack’s company, Square, is in the middle of mobile merchant and peer-to-peer payments. Square’s CashApp is the “enabler”, has 7 million active users, and is currently the second most popular app in the Apple Store. Jack envisions opportunity: “We’ve been exploring with Elizabeth and the Lightning team… Broadly, we have this massive seller network of small, medium, and large businesses… and we would love to make it as fast and efficient and transactional as possible, and that includes looking at our seller base and our register… You know, it’s not ‘if’, it’s more of a ‘when’… How do we make sure that we are getting the speed that we need and the efficiency?… From a merchant perspective, and that’s something we really need to get right.”
An integration with Bitcoin is one thing, but what about Twitter? Lastly, per Jack: “I think there’s a lot there… It’s really compelling and something we want to spend a lot more time on… We finally have these technologies, more broadly at the blockchain level, that I think can help us address some of the challenges we are facing with Twitter, including trust and identity, certainly providing more economic incentive rather than what Twitter provides today, which is reached. So, it is a pretty active conversation within the company and around the company. We want to be smart about it and make sure we are building something that feels really simple and accessible and is timed in the right way, but it’s definitely something that I’d be excited about and would love to see.”
How would other industry leaders view a Twitter/Square collaboration with Bitcoin and the Lightning Network? Jeremy Welch, the chief executive of Bitcoin hardware and software provider Casa, shared his opinion: “Silicon Valley hasn’t had the best view on Bitcoin overall. So, it would be significant on multiple levels, both in terms of adoption and their reputation and they have cachet with a lot of the bigger financial institutions.”